question archive We have learned in class that "the bullwhip effect can be a pervasive and expensive problem along the supply chain
We have learned in class that "the bullwhip effect can be a pervasive and expensive problem along the supply chain
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We have learned in class that "the bullwhip effect can be a pervasive and expensive problem along the supply chain." Please answer following questions about the bullwhip effect:
List 2 key activities that cause the bullwhip effect. How do they exacerbate the problems associated with the bullwhip effect?
List 2 other key activities that can act as deterrents against the bullwhip effect. How do they minimize and/or eliminate the problems associated with the bullwhip effect?
How can process integration help prevent minimize the bullwhip effect?
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Answer:
Two activities that cause the bullwhip effect are:
- Delivery delay-It is the time between an order being placed and its delivery.The longer the delay,the more likely the bullwhip effect will occure,as orders will increase throughout the supplychain while everyone awaits delivery
- Order batching-It occures when an organization accumulate larger orders before processing them in an effort to reduce cost and creat transportation economy.They may also wait to place larger orders to benifit from lower prices offered during a promotion.This inconsistent demand is the cause of the bullwhip effect.
These activities exacerbate the problem associated with bullwhip effect by delays in transmitting information and a lack of co-ordination up and down the supply chain.
Two other key activities that can act as deterrent against the bullwhip effect are:
- Increasing information visibility-Developing information systems which allow organizations and their supply chain members to more accurately assess the needs of the system.this will allow for more effective planning and provide a more efficient use of resources
- Decreasing order sizes-Smaller order sizes help supply chain members more accurately track changes in demand.such orders will be more frequent and allows forecast to be more accurate.
Process integration can help prevent/minimize the bullwhip effect by allowing customers and suppliers collaborate to improve the quality and frequency of communication through the supply chain.
